U.S. and Switzerland to revise tax treaty amid dispute

By IBT Staff Reporter04/06/09 AT 8:56 PM

The United States and Switzerland will head back to the negotiating table to revise a 1996 bilateral tax treaty in an effort to cool a high-profile dispute between the two nations over banking secrecy laws, the U.S. Treasury said on Monday.

We believe that all countries must adhere to international standards for exchange tax information, Treasury Secretary Timothy Geithner said in a prepared statement.

Geithner said he looks forward to swift conclusion of an agreement after talks begin April 28 in Berne, Switzerland.

The announcement comes days after the Group of 20 leading industrialized and emerging nations pledged to crack down on jurisdictions that fail to cooperate in cross-border tax evasion cases.

Pushed by France and Germany, the G20 agreed that countries should sign up to global rules on sharing tax information, with a commitment to cooperate when cheating is suspected.

Faced with the threat of being added to a blacklist, Luxembourg, Switzerland, Austria, Monaco and others signed up to standards drawn up by the Paris-based Organization for Economic Cooperation and Development just ahead of the G20 summit.

We welcome the moves by Switzerland to implement international standards by agreeing to revise the U.S.-Switzerland tax treaty for the exchange of information for tax purposes with the U.S, Geithner added.

The United States is in the midst of a spat with Switzerland over bank secrecy as Switzerland's largest bank, UBS AG, acknowledged earlier this year responsibility for helping U.S. clients conceal assets from the U.S. government.

UBS also agreed to pay a $780 million fine and to identify some U.S. clients, in a legal deal that resolved criminal fraud charges.

U.S. authorities, fearing that the agreement might yield very few names, then filed the civil lawsuit against UBS.

The talks are part of a multi-pronged effort to collect lost revenue for the financially strapped U.S. Treasury.

Separately, the U.S. Congress is working on legislation to crack down on tax havens, including Switzerland.

And last month the U.S. Internal Revenue Service announced it would make it easier for wealthy Americans to come clean and report hidden assets, reducing penalties to encourage taxpayers to pay up.

IRS chief Doug Shulman said in late March that his agency would issue new rules in a month or so that would make it easier for the IRS to go after foreign bank accounts of U.S. citizens.